KARACHI, March 18: Physical activity on the cotton market fell to low ebb on Tuesday as spinners and mills kept to the sidelines, anticipating a fall in local prices in sympathy with the New York cotton futures.
New York cotton futures resumed their last week’s downward drift on renewed fund profit-selling at still higher levels and in the absence of demand even at the falling prices.
“The cut in the US discount rate, from 3.50 to 3.25 per cent, and fears of recession in economy seem to have triggered fresh sell stops by speculative traders amid analysts’ predictions of a further fall,” local cotton analysts said.
Both the ruling May and the forward July settlements were marked down by well above the daily limit-fall, off 4.00 cents per lb at 75.30 and 77.90 cents per lb, signaling that the current sell-off may continue in the coming sessions also, they added. “Spinners and mills were happy on new developments on the international cotton, which worried them after the May contract soared to well over 90 cents per lb,” market sources said as they immediately withdrew from the market, hoping a fresh fall in prices.
“Any rate below 70 cents per lb in the backdrop of world supply and demand scenario will be ideal for us,” said a leading spinner, adding “we wait before opting for fresh import orders.”
He said the world cotton markets are in a virtual turmoil after the successive limit fall, from 94.00 cents to the current 75 cents per lb, and hoped the local prices would also fall in sympathy in due course.
As a result, there was relative lull on the local market after last couple of sessions’ hectic mill buying as ginners are not inclined to lower their asking prices for their parity reasons.
The next couple of sessions will show whether or not the ginners will be able to hold the price line as choked import outlets are reopening again, spinners said.
There was no change in the official spot rates, which were again firmly held at the overnight level of Rs3,300 per muand.
Ready off-take was at its lowest as price ideas of sellers and buyers were said to be poles apart, although some of the brokers reported stray deals in the Punjab cotton belt.
